The St. Louis real estate market is hot. Homes are selling fast because inventory is low, creating a banner selling season for homeowners looking to move. While St. Louis real estate market remains more affordable than in many other metro areas, low inventory and strong demand are putting upward pressure on prices. However, the number of new listings in the St Louis market is outpacing the number of closed sales, a reversal of the trend we saw until recently.
As the report below shows, there were 2,311 new residential listings in August 2021 and 2,106 closed sales. There were 2,689 active listings, which equates to a 1.4-month supply based on the rate of home sales. Even with the increase in inventory, it remains low, and the trend reports are only for one month, so we need to give it more time and monitor the trend over the next few months before concluding that there is possibly a significant trend indicating a market shift.
St. Louis Housing Market Trends 2021 (Describes August)
The St. Louis housing market isn’t limited to the roughly 300,000 people who live in St. Louis, making this the second-largest city in Missouri, after Kansas City. Instead, the Saint Louis metro housing market includes 2.8 million people. It is a bi-state metropolitan area that completely surrounds and includes the independent city of St. Louis, the principal city. It includes parts of both Missouri and Illinois.
Single-family detached homes are the single most common housing type in St. Louis. One and two-bedroom single-family detached homes are the most common housing units in St. Louis. Other types of housing that are prevalent in St. Louis include large apartment complexes, duplexes, homes converted to apartments, and a few row houses. St. Louis has a mixture of owner-occupied and renter-occupied housing.
According to Redfin, the St. Louis housing market is very competitive. The median sale price of a home in St. Louis was $210K last month, up 5.0% since last year. The median sale price per square foot in St. Louis is $142, up 1.4% since last year.
Many homes get multiple offers, some with waived contingencies.
Homes in St. Louis receive 3 offers on average and sell in around 12 days.
Hot homes can sell for about 7% above the list price and go pending in around 5 days.
Homes sales went up 0.6% since last year.
St. Louis housing market is a seller’s market, which means there were roughly more buyers than there were active homes for sale. Ideally, a buyer would prefer a sale to asking price ratio that’s closer to 90%. In St. Louis, the sellers have held good leverage in these negotiations in the past month. On average, they could sell homes for 102.2% of the asking price. A seller would always prefer scenarios that can yield a ratio of 100% or higher.
This report provided by MARIS covers residential real estate activity in the St. Louis REALTORS® service area. Percent changes for August are calculated using rounded figures.
St. Louis Housing Demand & Prices
Median Sales Price increased 6.8 percent to $260,000 for Residential homes.
Median Sales Price decreased 0.4 percent to $184,200 for Townhouse/Condo homes.
Average Sales Price increased 6.8 percent to $327,607 for Residential homes.
Average Sales Price increased 9.3 percent to $240,910 for Townhouse/Condo homes.
Days on Market decreased 37.8 percent for Residential homes and 41.9 percent for Townhouse/Condo homes.
Housing Affordability Index increased 2.9%.
Housing Supply
New Listings increased 2.5 percent for Residential homes and 14.0 percent for Townhouse/Condo homes.
Inventory decreased 22.1 percent for Residential homes and 20.1 percent for Townhouse/Condo homes.
Months Supply of Inventory decreased 30.0 percent for Residential homes and 34.6 percent for Townhouse/Condo homes.
The current Months Supply of Inventory for Residential homes is 1.4, which indicates a seller’s market.
It refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace.
Housing Sales
Closed Sales decreased 5.8 percent for Residential homes but increased 2 percent for Townhouse/Condo homes.
Pending Sales decreased 1.4 percent for Residential homes and 0.8 percent for Townhouse/Condo homes.
St. Louis Rental Market Trends
The average rent for a 1-bedroom apartment in St. Louis, MO is currently $950. This is a 3% decrease compared to the previous year. Over the past month, the average rent for a studio apartment in St. Louis increased by 9% to $850. The average rent for a 1-bedroom apartment increased by 2% to $950, and the average rent for a 2-bedroom apartment decreased by -4% to $1,200.
The average rent for a 2-bedroom apartment in St. Louis, MO is currently $1,200, a 7% decrease compared to the previous year.
The average rent for a 3-bedroom apartment in St. Louis, MO is currently $1,573, a 5% increase compared to the previous year.
The average rent for a 4-bedroom apartment in St. Louis, MO is currently $1,350, a 15% decrease compared to the previous year.
Infographic Courtesy of St. Louis REALTORS®
St. Louis Real Estate Market Forecast 2021-2022
Let us look at the real estate data for St. Louis from various sources. Is the St. Louis housing market shaping up to continue the trend of the last few years as one of the hottest markets in the nation? Let us look at the price trends recorded by Zillow (a real estate database company) over the past few years. Since Sep 2011, the typical home value in Saint Louis County has appreciated by around 58%. The typical value of homes in Saint Louis is currently $240,302.
It indicates that 50 percent of all housing stock in the area is worth more than $240,302 and 50 percent is worth less (adjusting for seasonal fluctuations). ZHVI represents the whole housing stock and not just the homes that list or sell in a given month. The supply is exceeding the demand, giving purchasers an advantage over sellers in price negotiations. In other words, there are more homes for sale than there are buyers in the marketplace. St. Louis is a seller’s real estate market – which means there are a lot of qualified buyers in the marketplace and not enough homes for sale in the market.
St. Louis County home values have gone up 17.5% (current = $240,302) over the past year and will continue to rise over the next twelve months.
St. Louis City home values have gone up 15% (current = $161,038) over the past year and will continue to rise over the next twelve months.
Here is St. Louis, MO real estate price appreciation graph by Zillow. It shows us the current home price appreciation forecast of 10% until Aug 2022.
Graph Credits: Zillow.com
St. Louis Real Estate Investment Overview
Is St. Louis a Good Place Real Estate Investment? Many real estate investors have asked themselves if buying a property in St. Louis is a good investment? If you want to find out whether St. Louis real estate is a good investment or not, you need to drill deeper into local trends. The St. Louis real estate trends will tell what the market holds for the years 2021 & 2022. We have already discussed the St. Louis housing market forecast.
St. Louis is most famous for the Gateway Arch built in the 1960s. Alternately looked down on as a Rust Belt city and part of flyover country, it doesn’t generate much attention except when its crime rate or other problems hit the news. However, the St. Louis real estate market holds significant potential. Purchasing an investment property in St. Louis real estate is a little different from shopping for your car or primary residence.
While you still want to get the most for your money, if you are looking to make a profit, you don’t want to buy the most expensive property on the St. Louis real estate market and expect to make a good profit on rents. Perhaps you are looking for a slightly different hold-over, an investment property in St. Louis that you might move into or sell at retirement in the future!
Either way, knowing your profit potential and purpose is the first thing to consider. Let’s take a look at the number of positive things going on in the St. Louis real estate market which can help investors who are keen to buy an investment property in this city. We’re not going to list major tourist attractions and use that to say you should buy property here, whether to live in or rent out. Instead, here are some of the top reasons to invest in the St. Louis real estate market.
Its Overall Affordability for Investors
The St. Louis real estate market has one other thing going for it: affordability. Taking into consideration both the average household income and the cost of homes in the area, St. Louis continues to be one of the most affordable markets in the country. The median home price in St. Louis City is roughly $160,000. A general trend is a price of $105 to $120 per square foot. You can find many single-family homes for sale for less than $100,000; this market is notable for the sheer number of two-bedroom homes that attract empty-nesters, single parents, and small families. If you take St. Louis county into account, the median home value is around $260,000.
Affordable and upscale are relative terms. Some of the most desirable real estate markets in St. Louis are surprisingly affordable to outside investors. The median price of homes in the “expensive” 63103 zip code is barely under half a million dollars. The tony 63105 zip code hovers around the half-million mark, too. You have to move far out to suburban zip codes like 63124 to find median listings past the $700,000 mark. Note that this is cheaper than a cheap condo in hot California or New York markets. You could buy two luxury homes in the St. Louis housing market for less than one in hot coastal markets.
The Market’s Price Stability
The St. Louis real estate market has seen strong appreciation over the past three years, finally bringing them out of the low prices they’ve suffered through the Great Recession that only ended two years ago. In the last twelve months, St. Louis’s appreciation rate has been 8.11%. In the latest quarter, NeighborhoodScout’s data shows that house appreciation rates in St. Louis were at 2.19%, which equates to an annual appreciation rate of 9.05%.
Relative to Missouri, our data show that St. Louis’s latest annual appreciation rate is lower than 60% of the other cities and towns in Missouri. Yet the market isn’t expensive. This suggests that those who buy in this relatively cheap market could enjoy reasonable price increases over time without worrying if they’re buying before a bubble bursts or if their investment will go down in value.
The True Bargains Are Abundant
A large number of vacant homes in the St. Louis real estate market, estimated at 20%, presents an excellent opportunity for those who want to buy, rehab, and rent out properties. When you factor in the suburbs, the vacancy rate is still around 6%. St. Louis also has a larger than the average number of distressed and underwater homes. In the U.S., roughly 1.5% of mortgages are delinquent. In St. Louis, the rate is 2.2%. Around 10% of homes have negative equity, while that rate exceeds 15% in St. Louis. You’ll be able to find vacant homes, distressed sellers, and foreclosures at bargain-basement prices here that you can renovate and rent out or sell throughout the St. Louis real estate market.
The Massive Renter’s Market
Around a third of the U.S. population rents. In the downtown St. Louis real estate market, nearly 60% of residents rent, and the rate is around a fifth when you include those in the suburbs. This is a huge rental market that you can take advantage of. Unlike college towns, your ability to find renters doesn’t depend on the popularity of the local college, nor will the value of the property depend on proximity to a particular school. College towns have a large proportion of renters, but you’re fighting with other investors to find properties to rent out to students.
St. Louis’ student market is fairly scattered due to the sheer number of universities. Yet it is large enough to present an opportunity for those who want to rent to students. Traditional universities in and around St. Louis include Blackburn College, Greenville University, Missouri Baptist University, St. Louis University, the University of Missouri – St. Louis campus, Washington University in St. Louis, and the Southern Illinois University Edwardsville campus. On top of this are various technical schools, seminaries, Bible colleges, and junior colleges.
Missouri is more landlord-friendly than other states in the area, notably Illinois. For example, it is much easier to evict someone who doesn’t pay their rent than surrounding states. In Missouri, you can file to evict if they’re just a few days late with the rent. There are protections for tenants, especially regarding security deposits. All of this is aside from the fact that the St. Louis real estate market has far more multifamily housing stock than other Midwestern markets.
Depending on the source, median rents range from $900-1000 a month in St. Louis and $1100 a month in the surrounding suburbs. Imagine buying a rental property for $50,000 and renting it out for $500-$1000 a month. You can rent out a studio apartment for $500 a month and a two-bedroom for $800. The rare four-bedroom apartment or house commands more than $1200 a month. It is hard to beat that ROI without risking your money buying liens and hoping you can secure a property. Because of the city’s age, you can find many older apartment buildings and apartment complexes at a reasonable price and rent them out at a decent rate.
The Known Redevelopment Opportunities in St. Louis
One of the benefits of master-planned redevelopment is that you know where real estate prices are going to go up due to renewed interest. The Garment District is slated for redevelopment, replacing the empty industrial buildings with homes and workspaces for creative types and new technology companies. The “New Northside” project wants to redevelop the entire north side of St. Louis. That project includes 1500 acres that border downtown St. Louis. Chippewa Park in south St. Louis is also targeted for redevelopment, too.
That renovation includes apartment homes and industrial space. St. Louis is old enough to have aging inner-ring suburbs. You can find redevelopment opportunities in suburbs like University City, home to Washington University in St. Louis. About 800 acres are slated for redevelopment in University City. Wellston is receiving funds from HUD specifically for redevelopment.
Summary
If you are looking to invest in St. Louis real estate, you should know the best places to invest in. The three most important factors when buying real estate anywhere are location, location, and location. The location creates desirability. Desirability brings demand. Demand would raise the price of your St. Louis investment real estate and you should be able to flip it for a lump sum profit.
A cheaper neighborhood in St. Louis might not be the best place to live in. A cheaper neighborhood should be determined by this factor – Overall Cost Of Living, Rent To Income Ratio, and Median Home Value To Income Ratio. When looking to invest in St. Louis real estate, you need to find places where the expected property appreciation forecast is positive. The running costs for owning and managing a St. Louis investment property should be low.
The neighborhoods in St. Louis must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools, and shopping malls. There should be a natural and upcoming high demand for rental properties and a low supply of income properties. St. Louis is a moderately walkable city.
Some of the best neighborhoods in Saint Louis, Missouri are Oakville, University City, Webster Groves, Clayton, The Hill, Central West End, Downtown St. Louis, Fox Park Historic District, Shaw Historic District, Shrewsbury, Richmond Heights, Lafayette Square, Maplewood, Dogtown, Benton Park Historic and Tower Grove East.
Central West End is an upscale neighborhood in St. Louis. It has everything from sidewalk cafes, smart Italian and Asian fusion restaurants, chic boutiques, and antique stores. Located just 10 minutes of drive from downtown, the Central West End is nestled between Forest Park and the Saint Louis University campus. Gravois Park is an affordable neighborhood in St. Louis.
Roughly bounded by Jefferson Avenue, Chippewa Street, Grand Boulevard, and Cherokee Street, the living in Gravois Park offers residents an urban and suburban mix feel. In Gravois Park, there are a lot of bars, restaurants, coffee shops, and parks. Gravois Park neighborhood is a diverse mix of homeowners, renters. Most residents in Gravois Park rent their homes, therefore, investing in a rental property here could prove to be a lucrative income model.
Here are a few good neighborhoods in the Saint Louis real estate market which have experienced the highest appreciation rates (List by Neigborhoodscout.com).
St Louis College of Pharmacy / S Vandeventer Ave
S Vandeventer Ave / Mcree Ave
S 39th St / Lafayette Ave
City Center
Dr Martin Luther King Dr / N Garrison Ave
Harris-Stowe State U / Market St
Cherokee St / Missouri Ave
Tower Grove
Arsenal St / S Compton Ave
S Jefferson Ave / Arsenal St
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.
Similarly, don’t let the country-western touristy image dissuade you from investing in Nashville, TN. There are several points in favor of the Nashville real estate market if you are looking for a solid opportunity. One of the best features of the Nashville real estate market is the median property price in the city, which is considered more affordable than most of the other top markets for investing in real estate in the U.S.
Although the Nashville real estate market is expected to move a little more slowly in 2022, which would make things better for buyers, the inventory will remain limited, which means that Nashville will remain among the fastest-moving housing markets in the U.S. Also, as the mortgage rates remain at record lows, it makes buying a property more affordable now than it was in the previous years.
Another housing market in Texas to go for diversifying your investments is the Austin housing market. The Austin housing market may be one of the more expensive ones in the state of Texas, but it stands out for its large rental market and high rental rates. It is an excellent place to invest in real estate in the Lone Star State. It may be the second most expensive housing market in the state with a typical home value of around $595K, but it is still far cheaper than California or New York. Buy up condos or townhomes, and you’ll be able to see a sizable return on the investment.
Remember, caveat emptor still applies when buying a property anywhere. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
References
Market Prices, Trends & Forecasts
https://www.zillow.com/saint-louis-mo/home-values/
https://www.stlrealtors.com/pages/housingreport/
https://www.redfin.com/city/16661/MO/St-Louis/housing-market
https://www.zumper.com/rent-research/st-louis-mo
https://www.neighborhoodscout.com/mo/st-louis/real-estate#description
https://www.realtor.com/realestateandhomes-search/Saint-Louis_MO/overview
Neighborhoods
https://www.homesnacks.net/cheapest-neighborhoods-in-st-louis-mo-1220885/
https://www.niche.com/places-to-live/n/gravois-park-st-louis-mo/
Redevelopment
http://www.northstl.com
http://news.stlpublicradio.org/post/university-city-leaders-try-reassure-residents-business-owners-about-redevelopment-plan#stream/0
https://nextstl.com/2016/12/wellston-first-aims-reinvent-struggling-historic-inner-ring-suburb https://fox2now.com/2018/05/22/downtown-st-louis-announces-next-phase-in-redevelopment-of-garment-distrrict
Landlord friendly
https://www.rentapplication.com/missouri-landlord-tenant-laws
https://www.rentcafe.com/blog/renting/states-best-worst-laws-renters
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